How to Start a Community Currency

“Banking institutions are more dangerous to our liberties than standing armies...The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." - Thomas Jefferson

“Let me issue and control a nation’s money and I care not who writes the laws.” - Banker Mayer Amschel Rothschild

The centralized creation of money and credit has a profoundly negative effect on local economies, sovereignty, and social cohesion. Bankers value profit at all costs, while locally-controlled institutions tend to hold other values - like community, justice and sustainability - more highly.

Communities can regain control of the flow of money and credit by issuing their own currency as a complement to conventional money, as electronic barter networks, debit cards, mobile phone payments, Timebanks, LETS, or old-fashioned cash.

By altering the flow of resources, community currencies take power away from multinationals and put it in the hands of more accountable local entities. While community currencies can't be too similar to or compete with national money, most countries allow it and some, like Venezuela and the E.U., support their development. Mediating underemployment and poverty are often prime motivators, or specific purposes like small-business incubation, caregiving for seniors, community gardens, or providing healthcare for the uninsured, according to CNN.

The Brixton Pound

Starting a community currency is not for the faint of heart. It takes a dedicated team years of effort. Learning from others' experiences is essential. Here are some tips I gleaned from the experts and through my own experience.

Find a group of people with common ground that are easy to get along with. It's important to share goals and values with your core group, otherwise your project will be pulled in many directions. You may split into separate projects at some point; that's often better than trying to duke it out with people who want to do their own thing. Focus on quality volunteer recruitment. Don't get discouraged when people come and go.

Define your goals and prioritize them. Do you want to support local business or low income folks? Do you want encourage ridesharing or reward senior care? You may have many goals - currencies can have an effect on many problems - but be clear about your priorities and target audience as this will shape all of your decisions, including what kind of currency you use.

“A currency is never an end in itself, but has to be seen as a facilitator of flows within the system of a whole community and economy," said John Rogers, who teaches how to start currencies at Value for People in the U.K. "Its essential systemic role is to match underused assets and unmet needs.”

The community meetings I held attracted all kinds of personal agendas and wingnut plans that had no practical application. Your goals will be your compass.

Pick your tool appropriately and make it easy to use. Currencies are not one-size-fits-all. It is crucial that you pick the right tool, with the option to expand into multiple tools later. It should be as easy to use as the other kind of money. REAL Dollars of Lawrence, KS ended because businesses didn't have an easy way to spend them. Vermont Businesses for Social Responsiblity switched to open source software for their business to business exchange to customize their interface and make it as simple to use - a very smart investment. The books at the end of this article can help you decide what type of currency might work best.

Bernal Bucks sticker for stores that use its currency

Know your community. If your tool is online, but your community is mostly offline, it won't get used. Bernal Bucks of San Francisco chose a swipe debit card with loyalty points. A more rural area like Corvallis, Oregon is more of an off-line community, so a paper currency isn't too slow for this small town.

How does your community use money, what are its assets and what does it need? Design a plan based on the reality of your community, not just on your own ideals. Whether you are working with businesses, nonprofits or community members, survey them or conduct focus groups to test the new currency before you finish your design.

Do your homework and get a mentor. Choose a group that's done a project similar to yours. Look up case studies that have worked (there are many mirages of success). Community Currency Magazine is a good resource for case studies and interviews and the Complementary Currency Database can help you search for mentors in your area. Many people sail out on a currency expedition without a map. Learn from others mistakes. Your membership and partners will trust you more if you've done your homework.

Define your governance and organization structure. Like any project you need good governance. John Rogers harps on this point: “Some people tell me off for going on about the importance of governance in getting community currencies to fly. They say a well-designed CC ‘should run itself’. That’s a nice theory, but I don’t know any CC that has stood the test of time without some form of governance at work, i.e. someone making decisions.”

People will expect responsible and transparent governance for a resource as valuable as a currency - that trust determines its value. Encourage diverse community participation and representation in your governance, especially from your members. If you want to operate as a volunteer or worker cooperative, see my article on worker coops. Bay Area Community Exchange is a hybrid of a member and a worker coop, though many currencies are either run as traditional nonprofits or business bartering exchanges.

Your decision to be a business or nonprofit will be determined by your goals, and currency type. Only entities that have charitable or educational aims can be nonprofits. That's not to say your business can't operate like a nonprofit, but you won't be eligible for grants and donations, though you may be able to get small investments, like Sonoma Go Local did from its community and business members.

Sonoma Go Local - "It Pays to Buy Local"

Define your geographic area. It may be helpful to incubate your currency in a smaller community, like Bernal Bucks did in a small neighborhood of San Francisco. However, a wider geographic area may provide the diversity of services and goods that makes a currency useful. Too wide an area though, like the Southwest, may be meaningless and not effective in building trust and solidarity. Ideally, it would be an area diverse enough to provide most of the necessities of life, and small enough to allow direct exchange, community-building and accountability. Regional currencies, like the Cheimgauer in Germany and Berkshares in Massachusetts have done well partly for this reason. If you don't grow food in your community, you may want to expand your reach to farming areas. If you haven't lived in your area for long, ask for advice from long time locals who may have sense of the resources and their flows.

Outreach through events. Hosting events to promote your currency and attending other groups' events raises consciousness, develops alliances, recruits members/users and volunteers, and builds community. Think about your target user audience and meet them where they are at. Swapmeets and skillshares are useful demos of the currency that give a more concrete feel. Offer to speak, host a booth, or organize trading at relevant conferences, festivals, markets and other events to promote your currency to potential members that are allied in values.

Bay Area Community Exchange organized a large sustainable living festival with over 40 workshops and 300 attendees using member skills and hours. The event increased trading and registrations by a factor of 10 or more for the month before the event and a couple weeks after. A similar boost happened around its Timebank Holiday Fair. Corvallis Hours, a bastion of homesteading, hosts an annual Harvest Festival where members have a market for “selling” their homemade goods for Hours.

Develop partnerships and take them seriously. Find allied organizations to help recruit members/users, develop programmatic partnerships and raise your status in the community. An ally may serve also as a fiscal sponsor to bear the burden of organizational tasks while you focus on organizing. Choosing partnerships should depend both on your goals (e.g. pick an environmental organization to support gardening or a social justice organization to reach low income groups) and their ability to provide support, such as event space, outreach, trainings or programmatic development. A good way to begin a partnership is to do a presentation to their staff and then ask them if there is one small thing they'd like to achieve by using the currency, like a website upgrade, and help them do that. Partnerships work best as a two-way street.

An Ithaca Hour

Ithaca Hours gained credibility and usefulness by partnering with local public transit for bus passes. Berkshares partnered with local banks for savings accounts and currency distribution. Hour Exchange Portland and other successful timebanks have worked with local healthcare organizations to accept credits from low-income members – a highly valued service that increases the value of the currency.

Keep the circulation flowing. Bernard Leitaer, who is often considered the godfather of community currencies and helped design the Euro, says “...this is where a lot of community currencies have failed. They have neglected to close complete circulation patterns, and as a result...it tends to pool in particular parts of the system.” To keep the energy flowing, identify unmet needs and underutilized resources in your community, especially those not served by the conventional system. Be a match-maker. If seniors need companionship and your pet shelter needs socialization for its animals, or you have unemployed people without job skills and a nonprofit or business startup that needs volunteers, you may have a match.

One of the biggest mistakes is assuming the currency will do everything itself. One or more exchange coordinators are vital, particularly in the beginning. Visiting Nurse Service of New York’s Timebank has a bilingual or trilingual coordinator for each targeted community. Regular communication through email, newsletter and your website reminds members what's offered and needed, and the importance of mutual aid. Otherwise, members forget and default to using money. Many currencies publish quarterly newsletters with directories of offerings.

Toronto Dollars being sold for use at the local market - photo by Jeff Buster

Working on circulation means creating ways to both earn and spend currency. Equal Dollars of Philadelphia developed a food market, clothing store and bike shop. They partnered with local nonprofits so members could earn hours by volunteering, paid their staff partly in Equal Dollars, and made micro-loans in Equal Dollars. MORE Timebank in St. Louis created a community college, where people could spend hours by taking classes, and earn hours by teaching. Another way to increase circulation is to target entities with high demand goods like beer (Detroit Cheers currency) or services, but make sure they don't over-commit themselves. One popular health food store ended up frustrated with loads of hours that they couldn't spend and quit. Set up limits to make it more sustainable, like using vouchers during slow business hours only or on over-stocked goods.

Use your currency to fund your currency. Hey, the government does it, why can't we? As long as members agree it's a good use of resources, don't be shy about using your currency to pay staff, reward volunteers, put on events, or do marketing. Ithaca Hours uses its currency as a reward for attending organizing meetings and swapmeets. Bay Area Community Exchange supports its volunteers by giving hours for outreach events, trainings and tech projects related to its key functions. This is controversial amongst community currency theorists, because the other side of the coin is corruption and inflation. The Red de Trueque, a currency used by a third of Argentina's residents during its economic crisis, collapsed because of fraud and mismanagement due to a lack of transparency and accountability.

Currencies are notoriously hard to fund. Relying on external donations, as did Berkshares, can make the short-term sustainability of your project slightly more likely, but the long-term more precarious. Using your currency to fund your project is also good practice in learning how to use it. Membership or transaction fees are also a good practice. However, it's helpful to lower the barrier to entry as much as possible in the first year or two so you have more members offering diverse skills and goods to increase your currency's value (fees may slow that process). Think about the option to pay member dues with volunteer work to support your currency project. A sparse directory with few members is not likely to encourage trading, as the now defunct Berkeley BREAD discovered. One of its most active members realized the currency she was earning with her counseling services, would not be useful for anything she needed and she quit being a provider. Alternatively, if you have lots of useful stuff in your store, people will flock to it.

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Don't give up but be willing to change directions midstream. Currencies take at least a few years to establish. In the meantime, you'll have fun, make friends and get some of your needs met. The Ithaca Hour project was the result of diehard tenacity and a small Americorps stipend that kept founder Paul Glover going for 3 years in the incubation stage. Some made it by adapting their strategy as they went along, like finding out the type of currency or organizing strategy was not appropriate for the community context or goals and changing directions. New Earth Exchange in Santa Cruz went through several incarnations over the last several years to find the right one instead of being stuck on their first idea. Now they are pioneers integrating an online business bartering exchange with a paper currency called Sand Dollars.

Have fun! It's a lot of work. Have fun doing it and you are sure to grow.